Our first quarter was incredible, especially compared to previous years, so I was very bullish about real estate in the Chapel Hill/Carrboro area, and the Triangle area in general. But beginning in early April, showings and phone calls slowed down despite the fact that April is usually one of the busiest months of the year and the peak of a typical spring market. ”Where are the buyers?” my sellers were calling to ask. First I thought it must be Easter, which came early this year. Then I attributed the slowdown to Easter. Yet Easter came and went, and Passover too, and the market continued to slow down.
News articles have been confusing, to say the least. This article from the National Association of Realtors on May 22, 2012 saying that home sales were up in April had me scratching my head. Home sales were up? It was obvious that the market had slowed down from its first quarter peak. But a clarifying article on May 30th explained that while home sales were up from April 2011, the slowest year since the housing bubble burst, home sales were down in April from March of this year.
he Pending Home Sales Index,* a forward-looking indicator based on contract signings, declined 5.5 percent to 95.5 from a downwardly revised 101.1 in March but is 14.4 percent above April 2011 when it was 83.5. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions. “Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said.
Yun notes home sales are staying well above the levels seen from 2008 through 2011. “Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007,” he said. “All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.”
Like any aspect of economics, housing improves when the citizenry is optimistic. When people feel good about their jobs and their place in the economy, they will buy homes. They will also get married, have children, and lives will evolve and transform in ways that often require changes in housing that is reflected in the real estate market. The role of the National Association of Realtors chief optimist economist is to encourage a strong housing market, and this serves a valuable purpose for the whole economy. But I think we are seeing, now that it is June, that the housing market, while stabilizing, is still not where we want it to be.
This article also claims that home prices will rise 2-3% in 2012 and 8-9% in 2013, a claim of which I am frankly skeptical. Until our demand outstrips are supply, prices will not begin increasing and we are not seeing this situation here in the Triangle. But the fact that so many homes are selling, and inventory is being cleared out of the marketplace, is an important first step to an overall healthy housing market.